Assessing the success of logistics operations carried out by an organization in the environment of a global economy is a challenging task, primarily, because of the number of factors to be taken into account. Apart from being divided into inbound and outbound, the logistics processes occurring in an organization include a variety of steps from locating the resources for raw materials acquisition to identifying the routes for the transportation of the final product to the target customer.
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When transferred into the environment of the global economy, the specified processes become increasingly complicated due to the abundance of external factors that affect them. The six factors that the Logistics Performance Index (LPI) embraces make the foundation for successful performance in the environment of global economy, as they incorporate the key components of a successful logistics strategy.
First and most obvious, the importance of customs-related operations needs to be brought up. The above-mentioned operations allow making the process simpler and avoiding a range of formalities that do not affect the quality of the customs-related processes (Nicolae, Ristea, Cotorcea, & Nistor, 2015). The infrastructure created by an organization defined the speed and efficacy of products and raw materials delivery. Therefore, custom-related operations should also be viewed as a crucial part of the LPI assessment.
The speed and efficacy of international shipments is another factor that defines the overall index of the logistics performance of an organization in the global environment. It is typically viewed as crucial to the assessment process. Indeed, the frequency of successful shipments is in direct proportion to the satisfaction rates among the target customers (Nicolae et al., 2015). Thus, the specified factor should be deemed as crucial to the evaluation of a company’s overall logistics performance.
Logistics competence is one of the building blocks of becoming a successful global company. Hence, it is crucial to include the specified factor in the overall assessment of global companies’ efficiency. While inbound logistics helps coordinate the related processes occurring in the organization, outbound logistics provide an opportunity from (Klumpp et al., 2014). Therefore, logistics competence rates define the success of a logistics strategy.
Tracking and tracing are two other essential factors of LPI, which creates premises for an organization to enter the global environment successfully. Particularly, the specified factor allows for successful accomplishment of the key logistics-related tasks. To be more exact, the specified tool allows for identifying the possible obstacles in the process of the delivery of products, raw materials, inventories, etc. (Xu, Tong, & Tan, 2011). Because of the complicated process of transportation in the global market realm, the specified tools are essential for the efficient accomplishment of the transportation processes.
The significance of timeliness cannot possibly be overrated in the context of international supply chain management (LPI ranking and scores, 2012). Seeing that operating in the international SCM environment presupposes numerous transportations that occur at a different pace depending on a variety of circumstances, such as the type of data transfer used, the method of transportation, etc., timeliness rates may be brought down considerably. The extended wait, in its turn, is likely to bring the rates of customer satisfaction down (Shanmugan & Kabiraj, 2012). Herein the significance of enhancing the timeliness of the companies’ operations lies.
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Every factor incorporated in the assessment tool serves its purpose of identifying the extent, to which an organization succeeds in making the basic transaction-related decisions. Therefore, LPI can be viewed as a legitimate tool for assessing companies’ success in the global market. Incorporating the information that allows identifying the companies’ performance, it serves as a perfect measurement of organization’s logistics-related progress.
Klumpp, M., Zelewski, S., Dobischat, R., Abidi, H., Kowalski, M., & Reidel, J. (2014). Logistics continuing education: “Berufswertigkeit” and the Duisburg model. Journal of Business and Economics, 5(10), 1739–1753. Web.
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Nicolae, F., Ristea, M., Cotorcea, A., & Nistor, F. (2015). The relationship between port logistics and global logistics performance. “Mircea cel Batran” Naval Academy Scientific Bulletin, 18(1), 83–87. Web.
Shanmugan, J., & Kabiraj, S. (2012). A case study approach for understanding supply chain orientation in Indian pharmaceutical firms. Kuwait Chapter of Arabian Journal of Business and Management Review, 1(9), 45–77. Web.
Xu, F. J., Tong, F. C. H., & Tan, C. J. (2011). Auto-ID enabled tracking and tracing data sharing over dynamic B2B and B2G relationships. In Conference proceedings (394-401). Sitges, Spain: The 2nd IEEE International Conference on RFID-Technologies and Applications (RFID-TA 2011). Web.